Geopolitics, Immigration, and AI to Reshape Global Labor Markets

Allianz Trade's new analysis reveals that beneath the surface of seemingly stable US and European labor markets, significant undercurrents are at play. Despite headline unemployment rates near historic lows, shifts in immigration policy, energy price shocks, and the rapid advancement of artificial intelligence (AI) are set to reshape the future of work.

The report highlights that in the US, a slowdown in immigration inflows has already decelerated job creation. Immigration's contribution to job growth has diminished significantly in 2025, potentially leading to sectoral labor shortages and impacting economic growth. In Europe, while some labor protection measures may cushion the blow of energy shocks, a prolonged crisis could increase unemployment, particularly in energy-intensive economies like Germany.

AI is projected to significantly impact labor markets, creating a "K-shaped" pattern. Younger workers and those in routine cognitive tasks are identified as most at risk, while roles that complement AI are expected to benefit. Projections suggest that AI could affect over 23% of jobs across major economies within the next 1-3 years, necessitating substantial workforce reorganization.

Allianz Trade emphasizes that AI is primarily altering how firms adjust to economic pressures, such as rising energy costs. AI enables greater internal substitution within production processes, potentially reducing the need for outright job destruction and changing employment dynamics. The long-term consequences of AI on labor markets will hinge on policy choices, including reforms to education and social safety nets.